Ethereum (ETH), the world’s second most important cryptocurrency, is trading at a new all-time high of a good 3,100 US dollars. And a forecast by Fundstrat even sees Ether at 10,000 US dollars by the end of the year.
Looking at the overall crypto market, we can see: Ethereum (ETH) has the momentum in its favor. Today, Monday, Ether climbed above the $3,100 mark for the first time in its history, and in parallel, it can increase its share in the market capitalization of all cryptocurrencies to over 15 percent. Over the last month, Ethereum also performed significantly better than the lead currency Bitcoin (BTC), which had to record a small minus at a high level, with a gain of almost 50 percent. At the same time, ETH could not come close to keeping up with BTC at the turn of the year, when Bitcoin tripled its price within a few weeks. In a recent study, the experts at the respected analysis firm Fundstrat have explanations for why Ethereum is developing so magnificently and why they consider $10,000 to be a realistic price target for ETH as late as 2021:
- When the crypto market experienced its first big boom from late 2017 to early 2018, Bitcoin was also leading the parade. But then Ethereum – already the second-strongest cryptocurrency globally by market capitalization at the time – was able to catch up to Bitcoin in capital gathered behind it by a narrow margin. Currently, Bitcoin’s market capitalization stands at just over $1 trillion, and Ethereum has only reached just over $350 billion in comparison by 35 percent. So if the 2017/8 cycle repeats itself, there is still plenty of room for ETH to climb.
- The reports and backgrounds on cryptocurrencies are currently changing their main topic, according to Fundstart. While Bitcoin as the “digital gold” and store of value was the dominant story so far, other highlights from the crypto industry are now finding their way to the general public with Decentralized Finances (DeFi) and apps for Web 3.0. When it comes to topics such as smart contracts, DeFi and DApps, Ethereum plays the leading role with its blockchain, which is also designed for complex tasks. Thus, ETH is currently attracting new investors.
- Fundstrat analysts also have high hopes for the plan to drastically reduce transaction fees in the Ethereum ecosystem through the EIP-1559 improvement proposal. To be sure, this push on Ethereum is not yet a done deal. But if EIP-1559 were to go into effect this summer – as called for by Ethereum creator Vitalik Buterin – it would begin an automated buyback program of ETH followed by burning. This would make ETH inflation no longer a problematic issue and transaction fees should settle back to reasonable levels, which is especially important for DeFi.
Conclusion: has the bull ride for Ethereum just begun?
ETH has been performing excellently for weeks and is currently catching up with its new all-time highs, which Bitcoin did in January and February. Fundstrat sees a sustainable trend in investments in crypto, also by institutional investors, and estimates that the combined market capitalization of Bitcoin and Co. will rise from the current $2.3 trillion to $5 trillion before the end of 2021. An important reason for this is the extremely loose monetary policy of leading central banks, which is intended to limit the economic consequences of the Corona pandemic with financial injections, but thereby also fuels considerable inflation risks. For Bitcoin, by the way, Fundstrat is sticking to its forecast of the $100,000 mark in 2021. But with topics like DeFi and NFTs as well as fundamental reforms at Ethereum, they definitely trust the silver standard among cryptocurrencies to narrow the gap between ETH and BTC with good and logical arguments. At over $3,000, ETH has in any case entered psychologically important new territory in the price curve since yesterday.
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